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DISTRICT OF COLUMBIA COURT OF APPEALS

No. 22-CV-636 & No. 22-CV-645

HTO7, LLC, APPELLANT/CROSS-APPELLEE,

V.

ELEVATE, LLC, APPELLEE/CROSS-APPELLANT.

Appeal from the Superior Court

of the District of Columbia

(2020-CA-003769-B)

(Hon. Jason Park, Trial Judge)

(Argued November 16, 2023 Decided August 1, 2024) 

Brett A. Berman, with whom Kristen Ward Broz was on the brief, for 

appellant/cross-appellee.

Matthew J. MacLean, with whom Katherine T. Danial was on the brief, for 

appellee/cross-appellant.

Before BLACKBURNE-RIGSBY,

∗ Chief Judge, and BECKWITH and DEAHL, 

Associate Judges.

 ∗ Associate Judge AliKhan was originally assigned to this case. Following 

Judge AliKhan’s appointment to the U.S. District Court for the District of Columbia, 

effective December 12, 2023, Chief Judge Blackburne-Rigsby was assigned to take 

her place on the panel.
2

DEAHL, Associate Judge: This is a commercial lease dispute between a 

landlord, Hto7, LLC, and its former tenant, Elevate, LLC. It is undisputed that 

Elevate terminated their lease agreement two years and three months into an 

eleven-year term. This dispute centers around whether Elevate was justified in doing 

so because Hto7 had previously materially breached the lease agreement when it 

failed to return, after several months of demands, a $38,000 security deposit that it 

was required to refund to Elevate after year two of the lease. 

The case went to trial, and the trial court did not address whether Hto7’s 

failure to return the $38,000 security deposit constituted a material breach of the 

lease agreement. It instead reasoned that it did not matter, because a “No Rental 

Offset” provision in the lease agreement—precluding Elevate from offsetting its rent 

obligations from amounts it felt were due—had nullified Elevate’s common law 

right to terminate the contract even in the event of a material breach. Elevate now 

challenges that ruling on appeal. 

We reverse. The No Rental Offset provision does not purport to (or implicitly) 

extinguish Elevate’s common law right to terminate the lease in the event of a 

material breach. What remains to be resolved is whether Hto7’s failure to return the 

$38,000 security deposit after several months of demands constituted a material 

breach in the context of a multi-million dollar lease agreement. We remand that 
3

question for the trial court’s resolution because it is a quintessential question of fact 

that is not conducive to resolution on appeal in the first instance. See 3511 13th St. 

Tenants’ Ass’n v. 3511 13th St., N.W. Residences, 922 A.2d 439, 445 (D.C. 2007)

(“Whether a particular breach of a contract is ‘material’ is a classic issue of fact.”).

Hto7 raises its own claims in this appeal related to how the trial court 

calculated its damages, though they are all premised on the now-questionable 

proposition that Elevate breached the contract without legal justification. For the 

sake of judicial efficiency, we address two of these arguments now in case they arise 

again after remand. Hto7 argues that the trial court (1) erred in finding that Hto7 

failed to take reasonable steps to mitigate its damages after Elevate terminated the 

lease, and (2) otherwise erred in calculating damages because it misunderstood when 

any replacement tenant would actually start paying rent (given the time it would take 

a new tenant to move in and some customary period of “free rent” at the start of 

commercial leases). We disagree with Hto7 on the first point; the trial court’s 

mitigation analysis was generally sound and well-supported by the evidence. We 

agree with Hto7 on the second point, however, because the trial court clearly 

misinterpreted the testimony regarding when Hto7 could have reasonably expected 

to receive rent payments from a new tenant had it taken all reasonable steps to 

mitigate its damages. If, on remand, the trial court determines that Hto7 did not 

materially breach the lease agreement in the first instance, we generally uphold the 
4

trial court’s mitigation ruling, but instruct it to reconsider its damages calculation in 

light of the considerations below.

I. Factual and Procedural Background

The Lease

Elevate agreed to an eleven-year lease with Hto7 for two floors of office space 

at 806 7th Street, NW, in the heart of the District’s Chinatown neighborhood. The 

lease was executed following extensive negotiations and the lease term began on

May 1, 2018. The lease set a payment schedule under which the base rent owed by 

Elevate increased over time, starting at about $19,000 per month during the first two 

years of the lease, doubling to about $40,000 in year three of the lease, and ticking 

up to roughly $48,000 per month by the eleventh and final year of the lease. Elevate 

was slated to pay more than $5 million over the entire eleven-year lease term, barring 

early termination (which Elevate was allowed to do at its option after seven years). 

A few provisions of the lease agreement are important to our consideration of 

this appeal. Section 5.1 required Elevate to provide Hto7 a security deposit of about

$115,000, or roughly six months’ worth of the initial base rent. At the end of the 

second lease year (on April 30, 2020), Hto7 was obligated to refund one-third of this 
5

amount, or about $38,000, within thirty days of receiving a written request for that 

refund from Elevate.

Section 16.4 of the agreement was a “No Rental Offset” provision, which 

stated:

Except to the extent expressly provided in this Lease, in 

the event that at any time during the Lease Term Tenant 

shall have a claim against Landlord, Tenant shall not have 

the right to deduct the amount allegedly owed to Tenant 

from any rent or other sums payable to Landlord 

hereunder, it being understood that Tenant’s sole method 

for recovering upon such claim shall be to institute an 

independent action against Landlord. . . . The obligation 

to pay rent under this Lease of Tenant is an express 

independent covenant of Tenant.

The lease also expressly permitted Elevate to unilaterally terminate the lease

in two instances: (1) if there were a “fire or other casualty” on the premises that 

required more than twelve months of restoration work, or (2) if Elevate reached the 

end of the seventh lease year and wanted to terminate the remainder of the lease, was 

not in default, and had not assigned the lease to a third party. Two separate 

provisions of the lease specified that, “[e]xcept as expressly otherwise herein 

provided, time is of the essence in this Lease.” The lease also included a catch-all 

provision which stated that remedies were cumulative:

No right or remedy herein conferred upon or reserved to Landlord or Tenant 

is intended to be exclusive of any other right or remedy, and each and every right 
6

and remedy shall be cumulative and in addition to any other right or remedy given 

hereunder or now or hereafter existing by agreement, applicable law or in equity. In 

addition to other remedies provided in this Lease, Landlord and Tenant shall be 

entitled, to the extent permitted by Law, to injunctive relief, or to a decree 

compelling performance of any of the covenants, agreements, conditions, or 

provisions of this Lease, or to any other remedy allowed to Landlord or Tenant at 

law or in equity. Finally, the lease provided in § 20.1 that Elevate would be in default 

if, among other things, it failed to pay rent or make any other required payment when 

due. Any such monetary default expressly permitted Hto7 to terminate the lease if 

Elevate, after receiving notice of its default, failed to cure it within ten business days.

Elevate’s Termination of the Lease

On April 23, 2020, amidst the early stages of the COVID-19 pandemic,

Elevate sent a letter requesting that Hto7 refund one-third of its security deposit, 

which it was entitled to per § 5.1 of the lease. Hto7 acknowledged receipt of the 

request later that day, but did not provide the refund within thirty days as required 

by the lease agreement. More than sixty days after that initial demand, on June 23, 

2020, Elevate emailed Hto7 a notice of default with a demand to cure, noting that 

Hto7 was “in default” because it had not provided the required refund within the 

thirty days mandated by the lease and demanding that Hto7 “cure its default within 
7

thirty days.” After those additional thirty days passed with no response from Hto7, 

Elevate mailed a July 25, 2020, notice of termination to Hto7, stating that it was 

terminating the lease “for cause” because Hto7 failed to provide the security deposit 

refund. Elevate asserted that Hto7’s failure was a material breach and demanded the 

return of its entire security deposit.

Three days later, Hto7, via counsel, responded with a letter contesting

Elevate’s right to terminate the lease in response to Hto7’s “minor breach,” citing 

the No Rental Offset provision as foreclosing Elevate’s right to terminate the lease. 

It was at this point that Hto7 first stated that it was prepared to refund the required 

$38,000 of Elevate’s security deposit, but that it would do so only if Elevate 

withdrew its notice of termination. If Elevate did not do so, Hto7 posited that it 

would be an “unlawful[]” attempt to get out of the lease. On July 31, 2020, Elevate

responded by reiterating that it was terminating the lease for cause because Hto7 still 

had not returned the $38,000 security deposit refund despite receiving more than

thirty days’ notice and despite being given more than an additional thirty days to 

cure the default. Elevate vacated the space that same day, as it had previewed it 

would do in its July 25 notice of termination.
8

Hto7’s Efforts to Re-Let the Premises

Following Elevate’s termination of the lease, Hto7, through its property 

manager, attempted to secure a new tenant. Hto7 eventually hired Newmark Group, 

Inc., to serve as its leasing broker in October 2020. Hto7 also hired a company to 

create a three-dimensional scan of the premises so that interested tenants could tour 

the space virtually. Newmark worked with Hto7 to create marketing materials and 

listed the premises on CoStar, a commercial real estate site.

On January 6, 2021, Newmark informed Hto7 of an unnamed prospective 

tenant with a “need to be in Chinatown” who wanted to “occupy the space by the 

end of the year.” Newmark reported that the interested party “asked for floorplans 

and rentable square footages.” Hto7 provided no response. One week later, 

Newmark followed up, stating that the “tenant who inquired about [the Elevate 

space] has also asked if [Hto7 was] interested in selling the building. This is the 

same tenant who has asked for floorplans, ceiling heights and [rentable square 

footages] for the space.” A week later, Newmark followed up again, indicating that 

the same party “continue[d] to ask about” rentable square footage “and ceiling 

heights,” believed the space was a “great option,” and needed “to be in the space” 

within the year. In response, Hto7’s representative replied that it “continue[d] to 

follow up on measurements,” which they anticipated being available “soon.” Hto7 
9

ultimately never provided any of the requested floorplans or other information in 

response to those repeated inquiries.

The following month, on February 10, 2021, another broker reached out to 

Newmark about a floor plan and asking price for the Elevate space. Newmark 

informed the broker that while there was “unfortunately” no floor plan, “ownership 

is getting the space measured this week.” This second broker followed up with 

Newmark again several weeks later, in early March, asking once more if floor plans 

were available. In response, Newmark replied “we will have them by the end of this 

week or early next.” Again, no measurements were ever provided.

Litigation

Hto7 sued Elevate for breach of contract. It sought the base rent for the 

remainder of the eleven-year term, or about $4.5 million, plus some additional costs 

for re-letting the premises, interest, and attorneys’ fees. Elevate countersued for 

breach of contract, seeking the $38,000 security deposit refund that it had never 

received. The trial court granted summary judgment to Elevate on that $38,000

counterclaim, and Elevate then filed an amended counterclaim seeking the return of 

its entire $115,000 security deposit.
10

The trial court held a bench trial on the outstanding claims during which it 

heard testimony from various Elevate, Newmark, and Hto7 executives regarding the 

lease negotiations and efforts to re-let the office space. Each party presented their 

own expert relevant to Hto7’s efforts to mitigate its damages after Elevate’s 

termination—Michael Goldman for Hto7, and Louis Kluger for Elevate—whose 

testimony we detail in our mitigation discussion below.

After hearing the evidence, the trial court concluded that Elevate breached the 

lease agreement when it stopped paying rent and vacated the premises at the end of

July 2020. The court did not opine on whether Hto7’s failure to refund the $38,000

was a material breach of the lease agreement, reasoning that the question was 

immaterial because Elevate had bargained away its right to terminate the lease even 

in the event of a material breach by Hto7. In support of that view, the trial court 

stressed that the lease agreement’s No Rental Offset provision meant that Elevate’s 

sole recourse in the event of any breach by Hto7 was “an action for damages, rather 

than early termination of the Lease.” The court drew further support for that 

conclusion from the two provisions that expressly permitted Elevate to terminate the 

lease early if (1) there was a “fire or other casualty” that could not be remediated 

within twelve months, or (2) if Elevate chose to terminate the lease after seven years. 

In the trial court’s view, the lease agreement unambiguously provided that those two 
11

provisions—when combined with the No Rental Offset provision—provided the 

exclusive bases upon which Elevate could terminate the lease.

The trial court then turned to damages. At the time of trial, Hto7 still had not 

secured a replacement tenant, and the trial court explained that Hto7 was entitled to 

recover the amounts it would have received under the lease provided that it had used

commercially reasonable efforts to secure a replacement tenant. The trial court 

found that Hto7 made reasonable efforts to re-let the premises and mitigate damages 

up until March 3, 2021, which was the date of the last of Hto7’s repeated unfulfilled

assurances—dating back to January 2021—that it would have the measurements

sought by prospective tenants “soon” or “this week.” The trial court reasoned that

“Hto7’s failure to measure the space and provide” the requested details by that date 

“frustrated re-letting efforts and was, therefore, unreasonable and in violation of 

Hto7’s duty to mitigate damages.” The trial court therefore calculated damages as 

if Hto7 had identified a replacement tenant on March 3, 2021, and it reasoned that 

this new tenant would have begun paying rent in November 2021 (a finding we 

address in Part III.B). While the damages calculation was further complicated by a 

host of factors irrelevant to this appeal, at bottom the court awarded Hto7 just north 

of $226,000 in damages.
12

Hto7 filed a motion to amend the judgment arguing that the trial court erred 

in finding that Hto7 did not make reasonable efforts to mitigate its damages. It 

argued that it was entitled to unmitigated damages through the end of the lease, or

about $4.5 million in unpaid base rent for the nearly nine years left on the lease term.

Alternatively, it argued that the trial court erred in calculating damages as if Hto7 

found a replacement tenant in March 2021 because there was insufficient evidence 

to conclude that Hto7 could have found a replacement tenant so quickly. Hto7 also 

asserted that even if it had found a replacement tenant in March 2021, the trial court 

erred in concluding that a tenant would begin paying rent just eight months later, 

given the time it would take for a new tenant to move in and then a customary “free 

rent” period that, by itself, would have been no less than eight months even 

according to Elevate’s expert. The trial court denied Hto7’s motion on all counts, 

though it did not explain why it failed to account for the time it would take for a new 

tenant to move into the space when calculating when a replacement tenant could be 

expected to start making rental payments. Both parties also filed post-judgment 

motions for attorneys’ fees and costs, and the trial court awarded Hto7 roughly 

$300,000 in attorneys’ fees and costs.

Elevate and Hto7 now each appeal. We begin with Elevate’s challenge to the 

trial court’s threshold finding that it breached the lease agreement before turning to 

Hto7’s challenge of the trial court’s damages calculation. 
13

II. Whether Elevate Breached the Lease Agreement

Elevate argues in its cross-appeal that the trial court erred in concluding that 

it breached the lease agreement when it vacated the premises and stopped paying 

rent after July 2020. Elevate insists that it had the common law right to terminate 

the lease agreement because Hto7 had already materially breached the agreement 

when it failed to return the $38,000 portion of its security deposit that was due to be 

refunded after year two of the lease. It further argues that the trial court was wrong 

to conclude that the No Rental Offset provision foreclosed its common law right to 

terminate the agreement after Hto7’s material breach, contrary to the trial court’s 

reasoning. We agree with Elevate that the lease agreement did not foreclose its right 

to terminate the lease in the event of a material breach by Hto7, though we remand 

for the trial court to consider whether Hto7’s failure to return the $38,000 security 

deposit was a material breach.

A. Elevate Did Not Waive Its Common Law Right to 

Terminate in the Event of Hto7’s Material Breach

It is a central principle of contract law that one party’s material breach of an 

agreement allows the other party to stop performing under the agreement, or to put 

another it way, to terminate the agreement entirely. See 3511 13th St. Tenants’ 

Ass’n, 922 A.2d at 445 (one party’s material breach of contract relieves the other “of 
14

any duty to perform”); Rosenthal v. Sonnenschein Nath & Rosenthal, LLP, 985 A.2d 

443, 452 (D.C. 2009) (“A party is excused from performance under a contract if the 

other party is in material breach thereof.” (quoting BioLife Solutions, Inc. v. 

Endocare, Inc., 838 A.2d 268, 278 (Del. Ch. 2003))); Ashcraft & Gerel v. Coady, 

244 F.3d 948, 950 (D.C. Cir. 2001) (“[A] party’s continuing obligations under a 

contract are conditioned on there being no ‘uncured material failure by the other 

party to render any such performance due at an earlier time.’” (quoting Restatement 

(Second) of Contracts § 237)). Elevate argues that Hto7’s failure to return its 

$38,000 security deposit was a material breach that justified its termination of the 

lease agreement in July 2020.

Hto7 casts no doubt on this common law principle that its own material breach 

would ordinarily allow Elevate to terminate the lease. It instead argues that “Elevate 

bargained away its ability to unilaterally terminate the Lease,” including for a 

material breach, as part of the lease agreement. It echoes the trial court’s reasoning 

that the lease agreement’s No Rental Offset provision, plus two other provisions that 

expressly gave Elevate the right to terminate in certain circumstances, displaced 

Elevate’s common law right to terminate in the event of material breach. 

This raises a question of how to interpret the lease agreement. “The proper 

interpretation of a contract,” at least when it is free from ambiguity as both the parties 
15

and the trial court agree the lease agreement is, “is a legal question, which this court 

reviews de novo.” Tillery v. D.C. Contract Appeals Bd., 912 A.2d 1169, 1176 (D.C. 

2006); Unfoldment, Inc. v. D.C. Contract Appeals Bd., 909 A.2d 204, 209 (D.C. 

2006) (“Where the language in question is unambiguous, its interpretation is a 

question of law for the court.”). We interpret a lease agreement as a whole, giving 

a “reasonable, lawful, and effective meaning to all its terms.” 1010 Potomac Assocs. 

v. Grocery Mfrs. Of Am., Inc., 485 A.2d 199, 205 (D.C. 1984). 

Contrary to the trial court’s reasoning, the No Rental Offset provision neither 

expressly nor implicitly waived Elevate’s common law right to cease performing 

under the lease agreement in the event of Hto7’s material breach. The No Rental 

Offset provision, by its plain terms, serves an entirely different purpose. It precluded 

Elevate from engaging in just one particular type of self-help—withholding rent to 

offset any damages. Terminating an agreement because of a material breach is an 

entirely different form of self-help that the No Rental Offset provision did not 

expressly or implicitly alter. While a tenant offsetting their rent obligations (which 

the lease agreement precludes) is an effort to continue performing under the lease, 

terminating a lease due to material breach puts an end to the agreement altogether. 

A lease agreement foreclosing the first type of self-help does not supplant the right 

to stop performing under the agreement entirely when the common law would justify 

such nonperformance.
16

To draw an analogy, imagine you bought a car for $20,000 and agreed to pay 

it off by making $1,000 payments per month for twenty months. Now let’s assume 

your financing agreement with the dealership further said that you could not offset 

your payment obligations by any amounts spent to make repairs to the car that you 

were assured was in good working order; like the No Rental Offset provision here, 

your agreement says that the “sole method for recovering upon such claim shall be 

to institute an independent action against” the car dealership. So if you drive the car 

off the lot and it immediately breaks down, and needs a new $10,000 engine, you 

cannot simply withhold your first ten months of payments to offset the cost of that 

new engine. If you want to keep the car and recover damages, you would need to 

sue the car dealership to recover that amount. But if you had a right under the 

relevant lemon laws to return the car entirely, nothing in the “no offset” provision 

above would preclude you from availing yourself of that remedy. You are not 

seeking to offset any amounts due to you, or seeking to recover upon any claim 

against the dealership—you simply want out of the deal. And the no offset provision 

does not, either on its face or implicitly, foreclose any rights the law may provide 

you to that end. 

Returning to this case, the No Rental Offset provision meant that Elevate 

could not withhold its June or July rental payments in order to offset the $38,000

that Hto7 was obligated to refund; to recover that amount and continue under the 
17

lease, Elevate would have to file suit against Hto7. If Elevate had simply withheld 

rent, it would have been in breach of the agreement, and Hto7 would have been in a 

position to terminate the agreement and sue for damages per § 20.1 of the lease. But, 

of course, Elevate never attempted to recoup its security deposit by withholding rent 

payments, which is all that the No Rental Offset provision precluded it from doing. 

Elevate instead continued making the obligatory rent payments throughout its 

tenancy and up until the point that Hto7 refused to even respond to its requests to 

cure what Elevate alleged was a material breach of the lease agreement. If Elevate 

was correct that Hto7 indeed materially breached the lease agreement by failing to 

refund the $38,000 portion of its security deposit, nothing in the No Rental Offset 

provision purported to abrogate Elevate’s common law right to walk away from the 

lease entirely, and then seek the return of its security deposit in a suit for damages, 

as it did.

Hto7, like the trial court, also relies on two other provisions in the lease 

agreement that expressly permitted Elevate’s early termination of the lease as 

supporting its view. But those provisions do not purport to, or even seem to, displace 

the common law right to terminate in the event of a material breach. “For a contract 

remedy to be exclusive of other remedies, it must be apparent from the face of the 

contract that the parties intended to make it so.” Pernice v. Bovim, 183 F.Supp.3d 

84, 90 (D.D.C. 2016) (citing Phenix-Georgetown, Inc. v. Charles H. Tompkins Co., 
18

477 A.2d 215, 225-26 & n.34 (D.C. 1984), and other cases). “If a contractual 

provision providing for termination for breach is not exclusive, it does not bar the 

remedy of termination for a breach that is material or that goes to the essence of the 

contract.” Tricat Indus., Inc. v. Harper, 748 A.2d 48, 60 (Md. Ct. Spec. App. 2000). 

The first such provision is just an early opt-out provision, permitting Elevate 

to walk away from the lease after seven years. That has no conceivable bearing on 

Elevate’s common law right to terminate. And the second provision simply codifies

what amounts to a material breach in one particular context—in the event of a fire 

or other casualty—providing that Hto7 would have twelve months to remediate the 

premises before it could be deemed in material breach. But illustrating what 

constitutes a material breach in one context does not suggest that no other material 

breaches are possible, or that no other material breaches would justify termination. 

What’s more, these provisions are caveated by § 20.5 of the lease agreement, which 

specifically notes that the lease agreement preserves remedies available in 

“applicable law or in equity,” such as the right to terminate in the event of a material 

breach.

It would also be bizarre to read the “fire or other casualty” provision as being 

the sole basis upon which Elevate could terminate the contract (outside of its 

seventh-year option). Just imagine if Hto7, contrary to its obligations under the 
19

contract, had simply never furnished the keys to the premises to Elevate, and had 

instead leased the premises out to an alternate tenant and then proactively blocked 

Elevate from accessing the property. That would undoubtedly have been a material 

breach of Hto7’s core obligations under the lease agreement, and it would be an 

untenable reading of the contract to say that the No Rental Offset and “fire or other 

casualty” provisions mean that Elevate simply had to continue paying rent over the 

course of the eleven-year lease term while seeking damages on the back end. But 

that is the natural extension of the trial court’s reading of the lease agreement. While 

parties are free to contract for harsh and even bizarre results like that, we should not 

lightly read such absurdities into a contract when it is just as easy to read it more 

sensibly. See United States v. Winstar Corp., 518 U.S. 839, 907 (1996) (plurality 

op.) (avoiding interpretation of contract that “would be absurd”); Am. First Inv. 

Corp. v. Goland, 925 F.2d 1518, 1521 (D.C. Cir. 1991) (avoiding interpretation of 

contract that would “produce an absurd result”). If Elevate had ceded the entirety of 

its common law right to terminate in the event of Hto7’s material breach, we would 

expect a much clearer statement to that effect in the contract than the No Rental 

Offset provision, but there is none. 

Finally, Hto7 stresses that the parties to this lease were both sophisticated and 

“represented by competent counsel” during lease negotiations. It suggests that is a 

point in favor of its interpretation of the lease agreement because the parties “did not
20

negotiate a provision that would provide Elevate a unilateral termination right” in 

the event the security deposit refund was not timely. But the point cuts the other 

way: Elevate had that unilateral right to terminate in the event of Hto7’s material 

breach as a matter of common law, yet the parties (sophisticated as they were) never 

expressly abrogated it, as they might have done. In other words, (1) the common 

law rule is that one party to a contract has a right to terminate in in the event of the 

other’s material breach, so that (2) if these parties meant to extinguish that right—

via the No Rental offset provision or otherwise—that intent had to be “apparent from 

the face of the contract,” and it simply is not. Pernice, 183 F.Supp.3d at 90 (citing 

Phenix-Georgetown, 477 A.2d at 225-26 & n.34). Hto7’s argument is thus circular: 

it treats the parties’ sophistication as a point in its favor only because it 

misunderstands how sophisticated parties should have understood this lease 

agreement on its face, given the legal backdrop they were negotiating against. Once 

that legal backdrop is clarified, the sophistication of the parties becomes a point in 

Elevate’s favor.

Contrary to the trial court’s reasoning, we conclude that the agreement did not 

eliminate Elevate’s common law right to terminate the contract in the event of Hto7’s

material breach. 
21

B. Whether Hto7 Materially Breached the Contract Is a Question of

Fact That We Remand for the Trial Court’s Consideration.

That leaves the question of whether Hto7’s failure to return the $38,000 due 

as a security deposit refund constituted a material breach of the agreement. Both 

parties urge us to rule on that matter in the first instance. In a nutshell, Elevate argues 

that it was a material breach because the agreement included “time is of the essence” 

clauses which it interprets to mean that Hto7’s failure to promptly refund the security 

deposit constituted a material breach. Hto7 counters that in the context of a lease 

agreement contemplating more than $5 million in base rent over eleven years, the 

failure to refund a mere $38,000 was not a material breach.

We remand this question for the trial court to rule upon in the first instance. 

“Whether a particular breach of a contract is ‘material’ is a classic issue of fact” and 

is generally not conducive for us to determine in the first instance. 3511 13th St.

Tenants’ Ass’n, 922 A.2d at 445. Whether Hto7’s failure to return the $38,000

security deposit was a material breach “involv[es] an inquiry into such matters as 

whether the breach worked to defeat the bargained-for objective of the parties.” Id.

(quoting Sahadi v. Continental Illinois Nat’l Bank & Trust Co., 706 F.2d 193, 196 

(7th Cir. 1983)). One potentially relevant fact that would seem to favor a finding of 

materiality is that, were the roles reversed and Elevate failed to make even one 

month’s rental payment, the contract would have allowed Hto7 to terminate the lease 
22

if that default were not cured within ten days of Elevate receiving notice of its

default. Here, Hto7 failed for more than thirty days to so much as respond to 

Elevate’s June 23, 2021, notice of default, seeking the $38,000 refund it was due 

(the rough equivalent of one month’s rent in that third year of the lease). 

This court faced a somewhat analogous scenario in 3511 13th St. Tenants’ 

Ass’n, where a would-be purchaser failed to make a $25,000 earnest money deposit 

as a precursor to the $1.3 million purchase of a multi-unit apartment building. Id. at 

441. Whether that failure to pay the $25,000 in earnest money was a material breach, 

we reasoned, could not “fairly be resolved” as a matter of law, but instead was a 

question for the “trier of fact,” so we remanded the case for a factfinder’s 

determination. Id. at 444-46. We adopt the same approach here. There is no 

question that Hto7 breached the lease agreement when it failed, after repeated 

demands, to refund Elevate the $38,000 it was due at the end of the second year of 

the lease. Whether that breach was a material one is a question for the trial court, as 

factfinder, in the first instance.

III. Hto7’s Challenges to the Damages Calculation

Hto7 raises a series of challenges to how the trial court calculated damages. 

Each of those challenges is premised on the proposition that Hto7 is due any 

damages at all, which is now unsettled. If Hto7 materially breached the lease 
23

agreement before Elevate terminated the lease, then Elevate was within its rights to 

stop performing under the lease and Hto7 has not been damaged. We nonetheless 

exercise our discretion to address two of Hto7’s arguments that “might well arise on 

remand” in the event the trial court concludes that Hto7’s breach was not material,

for the sake of judicial efficiency. See In re G.D.L., 223 A.3d 100, 107 (D.C. 2020)

(where an “issue could possibly become academic on remand,” this court retains 

discretion to address it when “it might well arise on remand”). 

Hto7 challenges the trial court’s calculation of damages in two respects that 

could reasonably arise on remand. First, it argues that no reasonable factfinder could 

have concluded that Hto7’s efforts to mitigate damages ceased being reasonable as 

of March 3, 2021, contrary to the trial court’s conclusion. Second, it argues that the 

trial court erred in concluding that a replacement tenant could be expected to begin 

rent payments in November 2021 had Hto7 acted to reasonably mitigate its damages.

We disagree with Hto7 on the first point, but agree with it on the second.1

 1 Hto7 raises a third issue regarding how the trial court calculated attorneys’ 

fees—which were recoverable under the terms of the lease agreement—but we opt 

not to address that issue now. The proper calculation of attorneys’ fees is best left 

until after the trial court has addressed the materiality of Hto7’s breach. 
24

A. Hto7’s Failure to Mitigate

Hto7 first argues that the trial court erred in concluding that its efforts to 

mitigate damages ceased being reasonable as of March 3, 2021. The duty to mitigate 

damages “bars recovery for losses suffered by a non-breaching party that could have 

been avoided by reasonable effort and without risk of substantial loss or injury.” 

Bolton v. Crowley, Hoge & Fein, P.C., 110 A.3d 575, 586 (D.C. 2015) (internal 

quotation marks omitted). A lease provision giving the lessor a right to recover lost 

rent is subject to a requirement that the lessor use “reasonable efforts” to re-let the 

space. Lennon v. U.S. Theatre Corp., 920 F.2d 996, 1000 (D.C. Cir. 1990). “[T]he 

failure to mitigate damages is an affirmative defense,” and the burden of 

demonstrating an absence of reasonable efforts to mitigate lies with the tenant. Sizer 

v. Lopez Velasquez, 270 A.3d 299, 303 (D.C. 2022) (citing Norris v. Green, 656 

A.2d 282, 287 (D.C. 1995). “Generally, [w]hat is a reasonable effort to [mitigate 

damages] is a question of fact, and thus for [the factfinder] to decide.” Havilah Real 

Prop. Servs. v. VLK, 108 A.3d 334, 343 n.8 (D.C. 2015) (internal citation omitted). 

We review questions of fact under a clearly erroneous standard, and will notset aside 

the trial court’s factual findings unless they are clearly wrong and without evidence 

to support them. Mingle v. Oak St. Apartments Ltd., 249 A.3d 413, 415 (D.C. 2021).
25

From January through early March of 2021, Hto7 repeatedly fouled off 

requests from prospective tenants who asked for floor plans and measurements of 

the premises. Emails entered into evidence showed that Hto7 was on notice that at 

least one prospective tenant—a seemingly eager one—sought floor plans, ceiling 

heights, and rentable square footages for the property as early as January 2021, but

that Hto7 made no reasonable efforts to accommodate its requests. By its own

representative’s estimate, Hto7 expected as of mid-January 2021 that it would have 

the relevant measurements “soon.” Then in early February it offered its assurances 

that it was “getting the space measured this week,” then again in early March it said 

it would have them “this week or early next.” Yet the requested measurements never 

materialized at any point, and Hto7 never offered any contemporaneous explanation 

for its delays. That record alone, before we even consider the testimony of the 

competing experts, provides adequate support for the trial court’s finding that Hto7 

did not act with reasonable diligence to mitigate its damages. “A factfinder can put 

two and two together without the help of an expert mathematician explaining how 

to do so.” See KS Condo v. Fairfax Village Condo. VII, 302 A.3d 503, 511 (D.C. 

2023).

Beyond the emails and Hto7’s lack of any contemporaneous explanation for 

its months-long delays in responding to the requests of potential tenants, Elevate

submitted an expert report from Louis Kluger that noted how as of the June 2021 
26

date of his report, Hto7 (1) had still “not furnished floorplans or an accurate square 

footage” to tenants that expressed interest in the space, and (2) had not shown the 

space to any tenant. Kluger also testified at trial that Hto7’s failure to provide the 

relevant “marketing materials for a ten-month period is well beyond the norm.”

Hto7 counters that its own expert, Michael Goldman, offered contrary 

testimony that the trial court ignored. Goldman opined that it was not unreasonable 

for Hto7 not to have procured floor plans by March 3, 2021, because they were 

difficult to quickly procure during that stage of the COVID-19 pandemic, and in any 

event, the floor plans should not have mattered to interested tenants because a virtual 

tour of the premises was available to them and better than mere floor plans. In 

support of its position, Hto7 points to Norris v. Green. In Norris, after tenants 

vacated a property, the landlord attempted to mitigate damages only by placing “For 

Sale” and “For Rent” signs in the window. 656 A.2d at 284. This court found that, 

despite those apparently meager efforts to mitigate, the tenants simply failed to offer 

any evidence that the landlord’s efforts to re-let the space were unreasonable. Id. at 

287-88. Hto7 argues that this case presents an “indistinguishable” scenario given 

that Goldman testified that Hto7’s efforts were “comprehensive” and “explained in 

detail why having two-dimensional floor plans available on March 3, 2021 was not 

only unnecessary but also complicated.” Hto7 also asserts that “Elevate presented 

no evidence to the contrary.”
27

But Hto7 is just wrong to assert that Elevate did not provide any evidence to 

the contrary. As already discussed, the January 2021 emails showed that an 

interested party considered the space a “great option,” needed to be in the 

neighborhood by early the following year, and liked the property enough to follow 

up twice in pursuit of measurements. And while Hto7’s own representatives 

contemporaneously and repeatedly indicated they could provide the requested 

measurements “soon” and “this week,” they failed to ever do so, without 

explanation. Those false assurances without any explanatory follow-up were 

facially unreasonable, no matter how difficult it was to procure floorplans or 

measurements at that time. And unlike in Norris, Elevate’s expert supported the 

already fairly obvious conclusion that a party seeking to mitigate millions of dollars 

in damages cannot give the silent treatment to prospective tenants who are seeking 

fairly routine measurements and floorplans. The trial court’s finding, that “Hto7’s 

failure to measure the space and provide details of the Premises . . . before March 3, 

2021, frustrated re-letting efforts and was, therefore, unreasonable and in violation 

of Hto7’s duty to mitigate damages,” had strong support in the evidence.
28

B. The Court Misunderstood the “Free Rent” Testimony

Finally, Hto7 argues that the trial court misinterpreted the expert testimony 

about when Hto7 could have expected to receive rent payments from a replacement 

tenant. We agree. 

After concluding that Hto7 failed to take reasonable mitigation efforts as of 

March 3, 2021, the trial court was left to address a counterfactual scenario in order 

to calculate Hto7’s damages: Had Hto7 acted reasonably at that time, when could a 

replacement tenant expect to begin making rent payments? In answering that 

question, the trial court should have accounted for two distinct periods after March 

2021 but before Hto7 could expect to receive any rent payments. 

The first period where Hto7 would expect to receive no rental proceeds is what 

we will call the “move in” period. Hto7’s expert (Goldman) explained that was the 

“period of time in between when the tenant signs the Lease and then actually moves 

into the space,” during which the parties finalize the lease and build out the space to 

tailor it to the tenant’s needs. Goldman opined that this move-in period could be 

expected to last six to twelve months before a replacement tenant actually moved 
29

into the space, and Elevate’s expert (Kluger) did not appear to offer any clear opinion 

on the matter.

The second period where Hto7 would expect to receive no rental proceeds is 

what we call the “free rent” period, which both Goldman and Kluger agreed is a 

customary part of commercial leases where tenants do not pay rent for some initial 

period after they move in. Kluger estimated that a tenant could negotiate one month

of free rent per lease year, which here translated to an eight-month free rent period 

based on the eight years remaining on Elevate’s lease. Goldman, by contrast, opined 

that a replacement tenant could have negotiated one-and-a-half to two months of free 

rent per lease year, so that a new tenant would have expected twelve to sixteen 

months of free rent. 

The trial court ultimately credited Kluger’s estimate that a new tenant could 

expect just eight months of free rent, which the trial court originally (but incorrectly)

posited was “within Goldman’s estimate of six to twelve months” of free rent. But 

the trial court did not account for any move-in period, as if a tenant could have been 

expected to move into the space immediately once it had been identified in March 

2021. So the court projected that Hto7 would begin receiving rent from a 

replacement tenant in November 2021, eight months after Hto7 might have 

identified a replacement tenant had it reasonably mitigated its damages. 
30

In its motion to amend the judgment Hto7 correctly alerted the trial court to 

two distinct errors. First, it pointed out that Goldman had estimated a twelve-tosixteen month free rent period, not six to twelve months as the trial court posited, so

that Kluger’s eight-month estimate was not, in fact, “within Goldman’s estimate.” 

Second, that free rent period was in addition to the six-to-twelve month move-in 

period that it would actually take for any lease term to commence—a period the trial 

court did not account for. The trial court denied the motion to amend, reasoning that 

it had “evaluated and weighed competing expert opinion” and found Kluger’s 

estimate that Hto7 would receive rent eight months after identifying a replacement 

tenant “persuasive.”

The problem with that reconciliation of the testimony is that Kluger never 

opined that a new tenant could move into the space the moment they had been 

identified, which under the trial court’s mitigation analysis would have been no 

sooner than March 3, 2021. So while we take no issue with the trial court’s decision 

to credit Kluger’s projected eight-month free rent period over Goldman’s twelve-tosixteen month free rent projection, the trial court failed to account for any move-in 

period, i.e., the amount of time it would take a new tenant, once identified, to actually 

move into it. 
31

A calculation of damages must rest on “an adequate basis for a reasoned 

judgment.” Vector Realty Grp., Inc. v. 711 Fourteenth St., Inc., 659 A.2d 230, 234 

(D.C. 1994) (internal quotation marks omitted). We are mindful that “damages need 

not be calculated with ‘mathematical precision,’” particularly in the context of 

assessing counterfactuals like the one the trial court confronted. Havilah, 108 A.3d 

at 352 (quoting NCRIC, Inc. v. Columbia Hosp. for Women Med. Ctr., Inc., 957 A.2d 

890, 903 (D.C. 2008)). But the trial court’s failure to account for any move-in period

preceding the commencement of a lease term and any free rent period was 

unexplained and seemingly unsupported even by Kluger’s testimony. It also 

overlooks a potentially substantial sum, as six to twelve months of rent payments 

under an expected lease would amount to hundreds of thousands of dollars. Should 

the trial court conclude that Hto7 did not materially breach the lease agreement in 

the first instance, it should reassess its calculation of damages and offer some 

accounting for the period of time it would take for a replacement tenant to move into 

the space after March 2021.

IV. Conclusion

For the foregoing reasons, we reverse the trial court’s determination that 

Elevate did not have a right to terminate the lease in the event of Hto7’s material 

breach. We remand for the trial court to consider whether Hto7 materially breached 
32

the agreement and hold that any such breach would have justified Elevate’s early 

termination of the lease. And should the issues arise again on remand, we uphold 

the core of the trial court’s mitigation analysis, but conclude that it erroneously 

failed to account for any move-in period that would precede the receipt of rental 

payments from any replacement tenant. It should account for that phase of no 

rental payments if it has to recalculate Hto7’s damages. 

So ordered.